With the justification of helping to protect crypto investors in South Korea, financial regulators have teamed up to create a central system that helps them to completely monitor and control the ins and outs of the South Korean crypto industry.
Currently, crypto exchanges in South Korea are subjected to certain regulations through conventional banks. With this new amendment, financial regulators will no longer have to deal with indirect regulation, but have total control of the affairs of every crypto exchange in the country. I guess the partial control they have over crypto exchanges is just not enough for their visionary anti-money laundering plan.
The Financial Intelligence Unit (FIU), with the backing of the Financial Services Commission (FSC), has already set the ball in motion, hoping for the approval of the National Assembly.
According to the FIU, this measure is very much plausible at this time as it was recommended by the Financial Action Task Force (FATF) international standards as a surefire way to tackle money laundering through digital assets. This FATF plan has already garnered serious opposition from various cryptocurrency exchanges.
The FIU plans on regulating the Sout Korean crypto market by bringing all digital asset exchanges under the “crypto exchange licensing system.”
The FIU head of administration and planning, Lee Tae-hoon, explained that an amendment to the existing reporting laws will greatly boost transparency in the crypto sector and will help curb money laundering in the space. He stated:
“If an amendment to the Act on Reporting and Use of Certain Financial Transaction Information, which reflects the FATF’s international standards for cryptocurrencies, passes the National Assembly, it will be possible to prevent money laundering through cryptocurrencies.”
Speaking during the recently held public hearing on the enactment of a new law to boost transparency in crypto trading, Lee argued that “If the amendment is approved by lawmakers, we can raise the effectiveness of regulations by shifting from the current indirect regulation through commercial banks to direct regulation.”
Does South Korea Still Heart Crypto?
The crypto sphere prides itself as a decentralized network with the utmost respect for users privacy. Will it still be the same concept of “cryptocurrency” if the government gets to control the happenings as seen in the traditional financial world? This is a recurring question among crypto enthusiasts and onlookers.
Also, the South Korean crypto community and a number of legal circles are concerned if these new measures will tally with those of the traditional finance sector, or if the crypto industry is being singled out for stricter rules and laws.
Until now, South Korea has generally been quite friendly and accepting to cryptocurrency-based businesses. Just this week, the country’s capital Seoul announced that it is planning to lunch its own city-sponsored cryptocurrency by the end of the year. We’ll therefore have to wait and see if this regulatory move is just another security measure or will it suppress crypto innovation in the state.